For the last decade, the price of housing has steadily been rising in Canada. Household income on the other hand, has not kept pace with the increase in the cost of housing. Among low-income communities in Canada, home ownership rates have been falling. Statistics Canada defines Low-Income Measure as less than 50% of the national median – for the 2016 Census, this was equivalent to an after-tax income of $38,335 for a household of 3 persons. The same year, Canada had an average house price of $490,495. Taking into consideration the minimum 5% down payment for houses worth $500,000 or less, households need approximately a $25,000 down payment, which ultimately requires mortgage loan insurance. This results in an overall cost that most low-income families cannot afford to pay.
Affordable housing is an umbrella term that is strongly context based. Even expensive, market-based housing can be considered affordable depending on income of the prospective homeowner. According to the Canada Mortgage and Housing Corporation, affordable housing is “when a household spends less than 30% of the before-tax income on acceptable shelter.” Therefore, one of the key aspects of affordable housing is that it should not impact the household’s ability to purchase other basic necessities, such as food, clothing or utilities.
Canada has a diverse range of housing models available for homeowners and renters. At the top is the market-based housing approach, where the household either owns the house or rents a house based on competitive, current market prices. On the other end of the spectrum, we have shelters which usually provide short-term facilities for persons without access to housing. Between these, we have two different housing models which includes the subsidized housing model, where the cost of ownership or rental is subsidized through grants. The other being the supportive housing model, which is one that provides housing and support based on individual needs.
Habitat for Humanity has an alternate housing strategy – providing homes to low-income families by utilizing what they can comfortably offer, taking into account the needs for a permanent shelter, subsidized prices and the need to provide prospective home-owners with purchasing flexibility. They are combining the most significant factors from most, if not all of the housing models discussed above. Houses are provided to partner individuals and families with no required down payment and interest-free mortgage, allowing families with lower finances to afford a home. Mortgage rates are set individually, depending primarily on the household income rather than a fixed, uniform rate. Monthly installments are no more than 30% of the gross household income, including the principal repayment and property tax amounts. This mortgage is reinvested in a revolving fund which is used to develop more houses in the community, creating a self-reinforced and sustainable development of accessible and affordable units.
While the Habitat housing model does involve finance, it also utilizes an equally valuable contribution – time, in the form of volunteering. Habitat homeowners are required to commit at least 500 hours as a volunteer with the organization, leveraging their skills and time into a meaningful contribution to the Habitat community by enabling more people to be able to afford secure housing.
Ultimately, the Habitat housing model ensures that individuals and households have the flexibility to pay based on how much they can afford. It utilizes a combination of money, time and skills so that low-income families and individuals can live in a safe and affordable house without being forced to compromise on other necessities. Habitat’s goals are to make sure everyone in need of a home can afford one, and with their established homeownership model, they are successfully fulfilling the basic definition of affordable housing.